Why has the European Union imposed additional tariffs on imports of electric cars made in China? The reason has to do with Chinese government subsidies to car manufacturers, a practice that makes competition with European brands "unfair". According to an analysis by the Centre for Strategic and International Studies in Washington, automobile and battery manufacturers have allegedly received a total of 230.8 billion dollars (more than 215 billion euros) between 2009 and 2023. BYD alone has apparently received $3.7 billion in direct subsidies from 2018 to 2022.
The brands affected
The tariffs set by Brussels amount to 17% for the Byd group, 18.8% for Geely and 35.3% for Saic. Tesla, on the other hand, will be subject to an individual assessment of 7.8%. The other companies that cooperated with EU investigations will be subject to an additional duty of 20.7%, while those that did not cooperate will be subject to maximum duties, as much as 35.3%. Together with the existing duties of 10%, the total duties will reach 45%. However, these tariffs will also affect European cars produced in China, such as the Dacia Spring, Polestar 2,3 and 4 and Cupra Tavascan.
Immediate reactions by the Chinese government
Naturally, reactions by the Chinese government were immediate, as confirmed by the request made last October by the Ministry of Commerce, which allegedly ordered Byd, Saic and Geely to block all planned investments in the construction of new production sites in Europe. According to a report by the Reuters news agency, Xi Jimping's government is said to have indicated that it would only make investments in European countries opposed to the duties, in an effort to create two opposing factions.
Alternative solutions
Despite the fact that the tariffs have been in place since the end of October 2024, China and the EU began talks in early December to find an alternative solution to replace the tariffs on imported vehicles. A spokesman for China's Ministry of Commerce told a reporter that the minimum price negotiations had made some progress thanks to concerted efforts by both sides, and expressed hope that both sides would work together while adhering to the principles of pragmatism and balance. At the same time, the chairman of the European Parliament's trade committee, Bernd Lange, stated they were “close to an agreement”: China may commit to offer electric cars in the EU at a minimum price. This would eliminate the competitive distortion caused by unfair subsidies, which is why the tariffs were introduced in the first place”. Contacts between Brussels and Beijing will continue to explore a mutual solution within the World Trade Organisation, also in response to requests for mediation from some member states, such as Germany, which opposes the tariffs, and Spain, which abstained in the 27-member vote in early October. The anti-dumping agreement - which the EU can also seek with individual Chinese carmakers - is designed to comply with WTO rules that require exporters to raise the price of goods. According to an EU spokesman, the deal would allow for the withdrawal of the newly announced tariffs. If an agreement is reached, the Commission will have to take a new decision to revise the regulation.
Bypassing EU tariffs thanks to Turkey
While waiting for solutions to remove European tariffs, some Chinese companies have reportedly found ways around the issue. How? Thanks to the EU-Turkey customs agreement, which allows goods to be exchanged without tariffs. The alarm came directly from Brussels. Chery, in particular, would be able to avoid EU tariffs on the same products sold by China, thanks to increased production in Turkey. This would amount to an additional cost of between 17% and 21.3% on the market selling price, on top of the existing 10% duty.
